1099 Filing Requirements for 2012

For the 2012 tax return filing season, your business tax returns (including the addition of Form 1040, Schedule C) again require you to disclose whether you have complied with your 1099 reporting obligations. One of the Treasury Department’s main goals is to minimize the tax gap. The additional Form 1099 scrutiny and transparency is clearly an initial step.

Similar to last year, Form 1099-K for Merchant Card and Third Party Network Payments must be filed. Merchant service providers (credit card companies) and payment settlement entities (Pay-Pal type companies) are required to send Form 1099-K to individuals and businesses that have accepted credit card payments or payments through a third party network that exceeded $20,000 and incurred more than 200 transactions during the year. Complicating matters, businesses and individuals should exclude from their Form 1099 reporting amounts paid to service providers through a credit card transaction, as those amounts will be reported to the service provider via Form 1099-K.

Penalties for failure to report have increased to up to $100 per 1099 that you do not distribute to a recipient and up to an additional $100 per 1099 that you fail to file with the government. Your potential total burden for noncompliance is up to $200 per 1099.

The deadline for distributing Forms 1099 is January 31st. The deadline for filing with the government is the end of February.